Pension savers stand to gain an extra £29,000 upon retirement due to new legislation, as per Government data. The Pension Schemes Bill, returning for its second reading today, will consolidate small pension pots under £1,000 into larger schemes, offering improved growth opportunities and addressing the issue of lost pension pots.
Frequent job changes or failure to update personal details with pension providers can lead to multiple small pension pots. Labour estimates that individuals saving into a pension pot throughout their career could see an additional £29,000 by retirement, benefiting around 20 million pension savers. The bill also mandates pension schemes to prove their value for money and help savers assess their returns.
Additionally, the bill includes a provision to merge billions of pounds of pension savings into larger “megafunds” to potentially yield higher returns. Minister for Pensions, Torsten Bell, emphasized the aim to enhance pension savings’ effectiveness and reduce costs for workers, translating to significant savings for average earners.
Minister for Local Government and English Devolution, Jim McMahon OBE, highlighted the bill’s importance in ensuring the Local Government Pension Scheme’s future readiness and leveraging its assets for community investment. Zoe Alexander, Director of Policy and Advocacy for Pensions and Lifetime Savings Association, praised the bill as a crucial step towards enacting vital reforms supported by the pensions industry, aiming to streamline pension administration, simplify processes for savers, and optimize scheme value for members.